Innergex Reaches Another Milestone in the Development of Its Boswell Springs Wind Project and Provides Update on 2022 Guidance
- Thirty-year power purchase agreement with a high quality, well-capitalized utility becomes effective
- Once constructed, the wind project should contribute to improving Innergex’s free cash flow per share and payout ratio
- Financing and tax equity investment process is progressing well, and on-site construction activities will ramp up in Q2 2023
LONGUEUIL, Quebec, January 18, 2023 – Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) has met all required conditions for the Boswell Springs power purchase agreement (“PPA”) to become effective. The 30-year, 320 MW busbar PPA was signed with PacifiCorp, a Berkshire Hathaway subsidiary (S&P credit rating: A), for the electricity to be produced by the wind project in eastern Wyoming. The commercial operation date is scheduled during Q4 2024.
“This is yet another step forward in the realization of our flagship Boswell Springs project in the United States, a wind project expected to bring important returns to Innergex and contribute to improving our payout ratio,” said Michel Letellier, President and Chief Executive Officer of Innergex. “We are very pleased with this agreement with PacifiCorp as it demonstrates our ability to accompany them on achieving the decarbonization targets of the western states. We are confident that this PPA will deliver steady long-term economic and environmental value for both partners.”
Total construction costs of the Boswell Springs wind project are expected to amount to US$544 million (CAN$728.2 million) of which US$41 million (CAN$54.5 million) has already been invested. Total financing including tax equity is expected to amount to approximately 90% of total costs, and the remaining sponsor equity not already invested will be financed from Innergex’s revolving credit facilities. The financing and tax equity investment process is progressing well, and on-site construction activities will ramp up in Q2 2023.
Excluding any financing structure which has yet to be concluded, operating cash flows from the Boswell Springs wind project are expected to reach approximately US$22.6 million (CAN$30.3 million) on an annual basis. Also, the project is expected to benefit from 100% of the US Production Tax Credits (“PTCs”) which should contribute an annual approximative US$39.2 million (CAN$52.5 million), which is indexed to inflation over a 10-year period. This PTC contribution does not take into account any additional potential bonus credits for domestic content or energy communities. U.S. Department of the Treasury guidance will be needed to clarify the domestic content bonus requirements and areas that qualify as energy communities.
The procurement of GE Renewable Energy wind turbine generators has been secured, while the permitting process and selection of the EPC contractor have been completed.
The Boswell Springs project was selected in response to a competitive solicitation in PacifiCorp’s 2020 All-Source Request for Proposals, issued in July 2020.
Update on 2022 Guidance
The Corporation makes targets using certain assumptions to provide readers with an indication of its business activities and future operating performance. The Corporation revised its targets for fiscal year 2022 on August 3, 2022. On February 22, 2023, Innergex will release its financial results for the quarter and fiscal year ended December 31, 2022. Based on currently available preliminary information, results are estimated to be in line with Innergex’s August 2022 projections except for projections for Production1 (in GWh) and Free Cash Flow per Share1. While the financial review remains ongoing, Production (in GWh) growth target is expected to increase by approximately 13% compared to the 22% guidance target disclosed in August 2022. Free Cash Flow per Share is expected to be of approximately 10% less than the $0.75 target disclosed in August 2022. In each case, the differences mainly result from the exceptionally low hydrology levels in British Columbia during the later part of 2022 and from the enactment of the new 2022 Supplementary Budget Act in France which aims to share additional revenues recognized for certain power purchase contracts with the French government. We refer the reader to the risks and uncertainties analysis of Innergex available in the “Risks and Uncertainties” section of the 2021 Annual Report. Final figures are subject to completion of the Innergex’s annual audit.
1 These measures are not recognized measures under IFRS and therefore may not be comparable to those presented by other issuers. Production is a key performance indicator for the Corporation that cannot be reconciled with an IFRS measure. Please refer to the “Non-IFRS Measures” section of the three- and nine-month periods ended September 30, 2022 MD&A for more information.
About Innergex Renewable Energy Inc.
For over 30 years, Innergex has believed in a world where abundant renewable energy promotes healthier communities and creates shared prosperity. As an independent renewable power producer which develops, acquires, owns and operates hydroelectric facilities, wind farms, solar farms and energy storage facilities, Innergex is convinced that generating power from renewable sources will lead the way to a better world. Innergex conducts operations in Canada, the United States, France and Chile and manages a large portfolio of high-quality assets currently consisting of interests in 84 operating facilities with an aggregate net installed capacity of 3,634 MW (gross 4,184 MW) and an energy storage capacity of 159 MWh, including 40 hydroelectric facilities, 35 wind facilities, 8 solar facilities and 1 battery energy storage facility. Innergex also holds interests in 13 projects under development with a net installed capacity of 731 MW (gross 768 MW) and an energy storage capacity of 745 MWh, 3 of which are under construction, as well as prospective projects at different stages of development with an aggregate gross installed capacity totaling 8,513 MW. Its approach to building shareholder value is to generate sustainable cash flows, provide an attractive risk-adjusted return on invested capital and to distribute a stable dividend.
Cautionary Statement Regarding Forward-Looking Information
To inform readers of the Corporation’s future prospects, this press release contains forward-looking information within the meaning of applicable securities laws (“Forward-Looking Information”), including the Corporation’s growth targets, successful development, construction and financing (including tax equity funding) of the projects under construction, sources and impact of funding, project acquisitions, and strategic, operational and financial benefits and accretion expected to result from such acquisitions, business strategy, future development and growth prospects, business integration, governance, business outlook, objectives, plans and strategic priorities, and other statements that are not historical facts. Forward-Looking Information can generally be identified by the use of words such as “approximately”, “may”, “will”, “could”, “believes”, “expects”, “intends”, “should”, “would”, “plans”, “potential”, “project”, “anticipates”, “estimates”, “scheduled” or “forecasts”, or other comparable terms that state that certain events will or will not occur. It represents the projections and expectations of the Corporation relating to future events or results as of the date of this press release.
Forward-Looking Information includes future-oriented financial information or financial outlook within the meaning of securities laws, including information regarding the Corporation’s targeted production, targeted Free Cash Flow per Share, the estimated project size, costs and schedule, including obtainment of permits, start of construction, work conducted and start of commercial operation for Development Projects and Prospective Projects, the Corporation’s intent to submit projects under Requests for Proposals, the qualification of U.S. projects for PTCs and ITCs and other statements that are not historical facts. Such information is intended to inform readers of the potential financial impact of expected results, of the expected commissioning of Development Projects, of the potential financial impact of completed and future acquisitions and of the Corporation’s ability to sustain current dividends and to fund its growth. Such information may not be appropriate for other purposes.
Forward-Looking Information is based on certain key assumptions made by the Corporation, including, without restriction, those concerning hydrology, wind regimes and solar irradiation; performance of operating facilities, acquisitions and commissioned projects; project performance; availability of capital resources and timely performance by third parties of contractual obligations; favourable market conditions for share issuance to support growth financing; favourable economic and financial market conditions; the Corporation’s success in developing and constructing new facilities; successful renewal of PPAs; sufficient human resources to deliver service and execute the capital plan; no significant event occurring outside the ordinary course of business such as a natural disaster, pandemic or other calamity; continued maintenance of information technology infrastructure and no material breach of cybersecurity. Please refer to Section 1 – Highlight of the Management’s Discussion and Analysis for the three- and six-month period ended June 30, 2022 for details regarding the assumptions used with respect to the 2022 growth targets and to Section 5 – Outlook of the Annual Report for the 2020-2025 Strategic Plan outlook.
For more information on the risks and uncertainties that may cause actual results or performance to be materially different from those expressed, implied or presented by the forward-looking information or on the principal assumptions used to derive this information, please refer to the “Forward-Looking Information” section of the Management’s Discussion and Analysis for the three- and nine-month periods ended September 30, 2022.
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